Wheaton to buy gold and palladium from Sibanye Gold

Wheaton Precious Metals, through its subsidiary, has reached an agreement to buy gold and palladium from Stillwater and East Boulder mines (Stillwater), located in Montana in the US and owned by South African firm Sibanye Gold.

Under the deal, Wheaton is required to make an upfront payment of $500m to Sibanye, followed by ongoing payments equal to 18% of the spot gold price and spot palladium price until the reduction of the advanced payment to nil.

“Stillwater is another accretive addition to Wheaton’s portfolio of assets that is expected to contribute both production and cash flow for decades to come.”

The deal will enable the company to receive the equivalent of 100% of the Stillwater gold production for the life of mine and an initial amount of palladium equal to 4.5% of Stillwater palladium production until the delivery of 375,000 ounces (oz).

The company’s share of the palladium production will fall to 2.25% until it receives 550,000oz and then 1% for the life of mine.

Once the transaction is closed, Wheaton’s estimated proven and probable gold reserves are set to increase by 410,000oz, while inferred gold resources will increase by 920,000oz.

The company will also have estimated proven and probable palladium reserves of 610,000oz and inferred palladium resources of 430,000oz.

Wheaton Precious Metals president and CEO Randy Smallwood said: “Stillwater is another accretive addition to Wheaton’s portfolio of assets that is expected to contribute both production and cash flow for decades to come.

“What mainly attracted us to this opportunity was the quality and size of the J-M Reef deposit, coupled with the ongoing expansion at the Blitz project.

“There are over 12km of undeveloped mineralisation associated with the J-M Reef between the two currently producing mines.”

The deal with Sibanye comes after Wheaton acquired a cobalt stream from Vale’s Voisey’s Bay mine in Canada.

For Sibanye, the streaming agreement serves as a financing instrument with no repayment of any of the upfront cash consideration and no minimum delivery requirements.